INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2011

INVESTMENT SECURITIES

INVESTMENT SECURITIES

2. INVESTMENT SECURITIES

        Investment securities available for sale are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At December 31, 2011:
State, county, and municipal securities	$	42,640,465	$	3,268,872	$	1,028	$	45,908,309
Mortgage-backed securities		67,940,959		1,405,456		116,957		69,229,458
Corporate securities		9,684,599		—		579,903		9,104,696
Totals	$	120,266,023	$	4,674,328	$	697,888	$	124,242,463
At December 31, 2010:
State, county, and municipal securities	$	46,806,735	$	438,879	$	1,341,400	$	45,904,214
Mortgage-backed securities		72,342,879		1,256,807		630,606		72,969,080
Corporate securities		8,528,250		30,435		76,804		8,481,881
Totals	$	127,677,864	$	1,726,121	$	2,048,810	$	127,355,175

        Investment securities held to maturity are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At December 31, 2011:
State, county, and municipal securities	$	3,292,492	$	83,898		—	$	3,376,390
Mortgage-backed securities		1,477		21		—		1,498
Totals	$	3,293,969	$	83,919	$	—	$	3,377,888
At December 31, 2010:
State, county, and municipal securities	$	3,294,356	$	85,669	$	4,735	$	3,375,290
Mortgage-backed securities		16,673		728		—		17,401
Totals	$	3,311,029	$	86,397	$	4,735	$	3,392,691

        The amortized costs and fair values of investment securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with and without call or prepayment penalties.

	Held to Maturity				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	1,477	$	1,498	$	250,000	$	250,688
Due after one year through five years		1,747,202		1,779,491		6,238,192		5,770,937
Due after five years through ten years		1,545,290		1,596,899		26,715,337		27,832,025
Due after ten years		—		—		87,062,494		90,388,813
	$	3,293,969	$	3,377,888	$	120,266,023	$	124,242,463

        Proceeds from the sale of securities were $9,221,000, $18,398,000, and $26,620,000 in 2011, 2010, and 2009, respectively. Gross realized gains on sales of securities were $381,702, $590,129, and $687,305 in 2011, 2010, and 2009, respectively. Gross realized losses on sales of securities were $180,281 and $10,880 in 2011 and 2009, respectively. There were no realized losses in 2010.

        Investment securities with carrying values of approximately $85,776,000 and $70,239,000 at December 31, 2011 and 2010, respectively, were pledged to secure public funds on deposit and for other purposes as required by law, FHLB advances and a $21.6 million line of credit at the Federal Reserve Bank discount window.

        Those investment securities held to maturity and available for sale which have an unrealized loss position at December 31, 2011 and 2010 are detailed below:

	Securities in a loss position for less than twelve months					Securities in a loss position for twelve months or more					Total
At December 31, 2011:	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Securities Available for Sale
Municipal securities	$	—	$	—		$	188,972	$	(1,028	)	$	188,972	$	(1,028	)
Mortgage-backed securities		16,456,324		(85,695	)		2,180,154		(31,262	)		18,636,478		(116,957	)
Corporate securities		5,226,732		(457,867	)		3,877,964		(122,036	)		9,104,696		(579,903	)
Total	$	21,683,056	$	(543,562	)	$	6,247,090	$	(154,326	)	$	27,930,146	$	(697,888	)

        There were no held to maturity securities in an unrealized loss position at December 31, 2011.

	Securities in a loss position for less than twelve months					Securities in a loss position for twelve months or more					Total
At December 31, 2010:	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Securities Available for Sale
Municipal securities	$	29,020,594	$	(1,309,720	)	$	424,292	$	(31,680	)	$	29,444,886	$	(1,341,400	)
Mortgage-backed securities		23,830,317		(437,141	)		3,286,680		(193,465	)		27,116,997		(630,606	)
Corporate securities		6,184,320		(76,804	)		—		—			6,184,320		(76,804	)
Total	$	59,035,231	$	(1,823,665	)	$	3,710,972	$	(225,145	)	$	62,746,203	$	(2,048,810	)

	Securities in a loss position for less than twelve months					Securities in a loss position for twelve months or more				Total
	Fair value		Unrealized losses			Fair value		Unrealized losses		Fair value		Unrealized losses
Securities Held to Maturity
Municipal securities	$	275,265	$	(4,735	)	$	—	$	—	$	275,265	$	(4,735	)

        Securities classified as available for sale are recorded at fair market value and held to maturity securities are recorded at amortized cost. At December 31, 2011 and 2010, the Company had 5 and 7 investment securities, respectively, that were in an unrealized loss position for more than 12 months. The Company reviews these securities for other-than-temporary impairment on a quarterly basis by monitoring their credit support and coverage, constant payment of the contractual principal and interest, loan to value and delinquencies ratios.

        We use prices from third party pricing services and, to a lesser extent, indicative (non-binding) quotes from third party brokers, to measure fair value of our investment securities. Fair values of the investment securities portfolio could decline in the future if the underlying performance of the collateral for collateralized mortgage obligations or other securities deteriorates and the levels do not provide sufficient protection for contractual principal and interest. As a result, there is risk that an other-than-temporary impairment may occur in the future particularly in light of the current economic environment.

        The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell those securities before recovery of its amortized cost. The Company believes, based on industry analyst reports and credit ratings, that it will continue to receive scheduled interest payments as well as the entire principal balance, and the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.

        The Company's investment portfolio consists principally of obligations of the United States, its agencies or its corporations and general obligation municipal securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The Company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant.